WT Business Beat

By Nick Wakeman

Dream dinner: Whitman, Lawrie talk HP and CSC challenges

If I could go to dinner with any two people right now, it would be Meg Whitman, CEO of Hewlett-Packard Co. and Mike Lawrie, CEO of Computer Sciences Corp.

Both have taken over troubled companies in the past year, and are trying to turn the proverbial battleship.

I’d probably want to take them to the Quarterdeck, a crab house just outside of Rosslyn in Arlington, Va., or to the Germantown Commissary, a rib joint near Memphis. I don’t want to worry about whether the glass is for red or white wine, or whether I have the right fork for the salad. Just a pitcher of cold beer, plastic cups and paper on the tables.

This would be a dinner without pretense because there can be no pretense when you are trying to save two companies with long histories of success. HP, along with IBM, invented computing. CSC was one of the earliest companies to prove that outsourcing IT services made business sense.

But both lost their way in recent years. They suffer from variations of the same challenges – cost structures that got out of whack, poor decisions on contracts and acquisitions, management structures that were inefficient and lacked accountability.

Whitman has the bigger challenge because of the sheer size of Hewlett-Packard, which has $127.2 billion in annual revenue. But that size might be its saving grace in that the company is too big to be a takeover candidate, and has a large enough installed base in the government and commercial markets to see it through the next few years until growth returns.

Whitman seems to realize this. While she and the company might be getting beaten up right now for it, she’s probably right in saying that it’ll probably be 2015 before the company returns to sustainable growth.

Lawrie, leading the much smaller CSC at $15.8 billion in annual revenue, will probably see results quicker, but probably faces a greater risk of a break up or takeover if he stumbles. I’ve often thought that if Dell really wanted to make a bold move into the services business, it should make a play for CSC. But Dell has struggled to make the services business it acquired when it bought Perot Systems work. The public sector portion has had three leaders in four years.

Because of their business models and scale, the CSC and HP recovery plans are not mirror images, but the focuses are similar in that they both want more efficiency, a new culture of agility and reduced costs, including a lower headcount. HP is cutting 29,000 workers. A lot of CSC’s focus has been on fixing troubled contracts that have been a drain on resources, particularly the U.K. National Health System. Lawrie has scored a success there with a revamp agreement. The company also has altered its operating model from a holding company to a more direct reporting structure.

I can imagine a conversation between these two including a little griping about the press and Wall Street’s short-term vision. But they’d probably agree that the pressure of quarterly reports can enforce some discipline in an organization. Whitman, being a member of the GOP, might complain about regulations.

But if I had to guess, I think they would mostly talk about people, and the challenge of bringing change to large organizations with long histories and traditions.

My own industry has gone through incredible changes in the last decade and the skills I need to succeed today are very different than the skills I needed to succeed when I started as a newspaper reporter in 1985, when we still had rotary phones on our desks.

I’ve seen a lot of kicking and screaming against change, so I can only imagine what it must be like in organizations the size of HP and CSC.

I think both Whitman and Lawrie are doing a good job of describing a path forward for their respective companies and creating milestones to be measured against.

They also would probably talk technology, focusing on cloud, mobile and cybersecurity and finding the right play in those areas to stand out from the field. It’s all about differentiation, isn’t it?

While HP has a huge product business, they know their growth will come from solutions that include hardware, services and software. Services such as integration, consulting and transformation are where CSC’s future success will lie.

Neither wants to be a commodity player, I would think.

The dinner most likely would be off the record, so I hope I’d get to hear some juicy insider gossip about who’s been fired and why, beyond the rote “we wish them best in their new endeavor” announcements that are released publicly.

I’m sure there would be some stories about the heartbreaking decisions they’ve had to make so far, and the ones yet to be made.

We’d probably end with key-lime or banana-cream pie for dessert.

Yep, two leading executives talking huge challenges, eating ribs or crabs and drinking cold beer, that would be a great dinner.

Posted by Nick Wakeman on Oct 04, 2012 at 7:23 PM

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Reader Comments

Fri, Dec 7, 2012

Pssst.. we employees here at CSC will let you in on the secret, save you from having to buy dinner. The carefully thought out strategy is to triple the rates employees pay for insurance, reduce vacation to two weeks, reduce severance, eliminate raises and delay as long as possible the reimbursement of travel expenses to increase cash flow.

Wed, Oct 31, 2012

I personally found this to be an interesting and entertaining discussion. Not sure what is wrong with the guys above ... who said anything about publshing?

Fri, Oct 5, 2012
fred

you cannot be serious

Fri, Oct 5, 2012
cscfraud

No you do not publish comments that are negative towards your reporting. You guys call yourself journalist.

Fri, Oct 5, 2012
Edward

Have you requested dinner with HP and CSC's top leader's to have the discussion you describe?

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